TCS may pull the plug on portals, tech firms

Tata Consultancy Services is reviewing its investments in portals, technology companies and start-ups. Most of these investments were made in India, Singapore and the United States during the dot-com boom.

Some of the names that figure in this list include eMecklai, the foreign exchange and commodities portal, the Bangalore-based WAP portal Jatayu, set up in partnership with General Electric, Innova TV, a multimedia company in the US which undertakes research and development in streaming videos, eAsiaFinance of Singapore, an Internet banking company, Skandinaviska Enskilda Banken of Sweden and Compass Venture Capital, the venture capital arm of McKinsey & Co.

A TCS executive said, "In keeping with the changing technology, we feel the need to review our investments."

It is understood that TCS could pull the plug on some of these investments.

However, a TCS spokesperson said: "A review does not necessarily mean we will get out of these businesses. It is a continuous exercise at TCS. It could even lead to consolidating our position in some of them."

The move is also being viewed as critical in the light of TCS' initial public offer some time in the next 12 months.

Owing to the strong disclosure norms in the US and the discerning investor community, TCS' investments in non-core businesses could be questioned, analysts feel.

"It could be a move to make the company's balance sheet a lot more attractive," an analyst said.

TCS invested in the portal business in keeping with its traditional areas of strength--banking and other financial services, insurance, healthcare and manufacturing. For example, TCS tied up with a team of doctors and launched a healthcare portal called webhealthcentre.com.

The site, which provides experts' opinion to patients and doctors, is jointly owned by both the promoters and backed by a revenue-sharing arrangement between the two.

Recently, TCS acquired Swiss Air's 75.1 per cent stake in Airline Financial Support Services converting it into a wholly owned subsidiary, while General Electric is buying out the Tatas' 50 per cent stake in the Engineering and Analysis Centre of Excellence.

TCS, the software and services arm of the Tata group, employs over 20,000 consultants. It reported a revenue of Rs 4,187 crore (Rs 41.87 billion) in 2001-02.